Weekly Report - 6 January 2004

ECUADOR | Debt squeeze tightens. The latest external debt figures have added urgency to the Ecuadorean government's pleas for some formula that will allow it to ease a servicing burden that is absorbing half the national budget. At the end of October the total external debt stood at US$16.58bn. This represents an increase of 21% since the beginning of the year, and is not only the highest level on record since Ecuador dollarised its economy; it is 18.2% higher than the pre-dollarisation level of 1999.

The main force behind the increase is private borrowing. Of the October total, US$11.44bn is public debt (up from US$11.41bn in January) and US$5.13bn private (up from US$4.82bn in January). In 1999, the public external debt was US$13.75bn, the private one US$2.53bn.

COLOMBIA | New tax reform bid ahead. Just before 2003 ended, the Colombian congress approved the tax legislation introduced by the government to compensate for the failed referendum on a broader structural reform. This package is expected to raise an extra Col$2bn (just over US$715m) in revenues this year. President Alvaro Uribe, however, has not given up on the broader reform. He is planning to set up in February three `mixed' committees with representatives of the executive and congress to seek a formal `understanding between the congress and the [public] powers' to pursue this and other reforms.

PERU | Future in gold. If current estimates prove correct, Peru will have become by end-2003 the world's sixth-biggest producer of gold, with an output of 170 tonnes (10% more than in 2002). Exports of gold are reckoned to have totalled more than US$2bn: 35% more than in 2002 and equivalent to 23.5% of total export earnings.

This news comes on top of the announcement that Gold Fields, South Africa's second-biggest gold-mining firm, has taken a 92% stake in Peru's Sociedad Mira la Cima, which could end up accounting for 3.5% of Gold Fields' total output (with 147,000 ounces of gold and 65m pounds of copper). This is the South African company's first incursion into Latin America.